Many of us students have moved to Waterloo to pursue higher education. Have you ever thought about whether the moving expenses you incur are deductible on your tax return?
The Act allows for the deduction of certain expenses related to moving if the purpose of the move was related to work or to attend a university, college, or other post-secondary institution. Under both scenarios, the deductible expenditures would be required to meet the definition of an “eligible relocation”. An eligible relocation for both taxpayers requires that the taxpayer move 40km closer to his or her work location or post-secondary institution.
Regarding a move for employment purposes, if the moving expenses exceed income from the work location in the year of the move, the expenses can be deducted in any following year against income from the new work location. The taxpayer cannot be reimbursed or be in receipt of an allowance from his or her employer for the moving expenses the taxpayer is claiming. It is also important to note that the move does not have to be in the same year as the change in employment.
Deductible expenditures include:
- Reasonable travelling costs in moving the family members to the new residence (including the cost of meals and accommodation near the old residence or an acquired new residence for a period not exceeding 15 days)
- The cost of revising legal documents to reflect the taxpayer’s new address, replacing drivers’ licenses and automobile permits and obtaining utility connections and disconnections
- Transporting or storing household effects
- Selling costs of the old residence, including real estate commission and legal fees
- Lease cancellation costs in respect of the old residence
- Mortgage interest, property taxes, insurance premiums and costs associated with maintaining heat and power, to a maximum of $5,000
- The cost of legal services, land transfer taxes, or registration taxes, but not goods and services tax, in respect of the new residence but only where the old residence is being sold
Taxpayers may also choose a simplified method to calculate certain travel expenses by using a pre-established rate. Individuals may claim a flat rate of $23/meal up to a maximum of $69/day per person without receipts. The taxpayer may determine the deduction for vehicle expenses (which includes operating and ownership expenses) by multiplying the kilometers driven by the relevant flat rate for the year. The 2022 km rate for Ontario is 61.5c per kilometre.
More information is available on the CRA website.
- Mahnoor, Young Tax Professional